Fed expands auction, accepts wider collateral ( bonds backed by auto loans and credit cards.???)

MarketWatch ^ | May 2, 2008 10:51 a.m. EDT | Steve Goldstein, MarketWatch

[Ernest_at_the_Beach]

NEW YORK (MarketWatch) -- The Federal Reserve, along with other central banks, said Friday that it was increasing the funding it is providing to banks and announced that, for the first time, it was willing to accept bonds backed by auto loans and credit cards.

"In view of the persistent liquidity pressures in some term funding markets, the European Central Bank, the Federal Reserve and the Swiss National Bank are announcing an expansion of their liquidity measures," the Fed said in a statement.

The Fed took the move in an attempt to flood the market with supply and lower short-term lending rates, such as the London interbank offered rate, or Libor.

The U.S. central bank announced an increase, to $75 billion from $50 billion, in the amounts auctioned to eligible depository institutions under its biweekly Term Auction Facility, beginning with the auction on May 5.

This increase will bring the amounts outstanding under the TAF to $150 billion.

The move to expand the TAF was widely anticipated because of strong demand for loans through the program. See full story.

"The program is now reaching a magnitude where it can play a significant role in plugging the gap between the remaining demand for unsecured term funding in the bank market and the latest decline in supply following the run on Bear Stearns," wrote Lou Crandall, chief economist for Wrightson ICAP.

The expansion was "probably marginally disappointing because there was a widespread expectation ... that the Fed would extend the term of at least some TAF auctions to three months," wrote Stephen Stanley, chief economist for RBS Greenwich Capital.

[Jacquerie]

Yes.

All told, the Fed has now offered to lend up to $462 billion in cash and Treasurys to the markets, in addition to the nearly unlimited funds available through the discount window and the primary credit dealer facility.

Make no mistake, our government has/will inflate the savings and income of hundreds of millions in order to "save" financial institutions and avoid 1930s style Depression.

Inflation is a tax by the unelected, untouchable Federal Reserve.

[bjs1779]

Make no mistake, our government has/will inflate the savings and income of hundreds of millions in order to "save" financial institutions and avoid 1930s style Depression.

The deadbeats outsmarted the the best and brightest at the banks. Now, the Fed is giving the banks money to repeat the process all over again. Debt seems to be their only solution, which was the problem in the first place.

[bjs1779]

Inflation is a tax by the unelected, untouchable Federal Reserve.

Monetary policy used to be important with conservatives. It appears that no longer is true. Anyways, how can anyone get it closer than this guy?

"A bit of background Banks must keep specific amounts of cash on hand, called required reserves, to ensure that they can meet customers' withdrawal requirements. Money flows in and out every day at different levels, so when some banks fall behind, those with deeper pockets loan money out and cover the difference. Bank of America (NYSE: BAC) can lend to Washington Mutual (NYSE: WM), JPMorgan (NYSE: JPM) can cover Wachovia (NYSE: WB), and so on, until everyone is squared up at the end of the day. It's like the corporate version of a hippie commune."

http://www.freerepublic.com/focus/news/2010344/posts?page=3#3

[RKBA Democrat]

The Fed is simply covering more bad investments of Wall Street.

...nothing to see here folks, move along....(/s)

[RKBA Democrat]

“Feds to tighten rules on credit card companies-New rules aimed to curb abusive credit card practices.”

Thus slamming the barn door firmly shut...after the entire herd has run out. In the mean time, any garbage debts generated are now fine and dandy to use for collateral. At least as far as the Fed is concerned.

[Marine_Uncle]

Actually it was none other then Herbert Hoover.
"A Chicken in every pot and a car in every garage."